Tuesday, July 28, 2009
7:37:26 PM EDT

If you can't beat them...

by
James Brown

Why We Like It:
If you can't beat them, join them! We've been waiting for a correction in the market but it may not happen until the S&P 500 tags overhead resistance near 1,000 first. Instead of sitting on our thumbs let's see if we can capture part of that move. However, instead of trading the S&P 500 or any of its ETFs I want to use the OEX, which tends to be a little more volatile so we can get more bang for our buck.

I'm suggesting a trigger to buy OEX calls at 458.10. If triggered our target to exit is 469.00. More aggressive traders may want to aim for the 480 region.

FYI: An alternative trade could be the double-long S&P 500 ETF the SSO. Use a trigger above $29.75 and a stop at $28.90. Or you could try the small cap ETF (symbol IWM) and use a trigger above $55.50 and a stop under today's low. Or even the midcap ETF (MDY) with a trigger just over $114.00 and a stop just under $112.00. Target the $117.50 region. These are all very aggressive, very short-term. I would use a very small position size. No matter what you trade just keep an eye on the S&P 500 index and the 1,000 level.